The Broadbent Blog

Budget let-down: Canada's youth need much more

Recessions are always harder on young workers, but we are nearly five years out from the end of the last recession and there is still no recovery in sight for this important demographic.

Between October 2008 and January 2014, there was an increase of 100,000 unemployed young workers (15-29), so that there are now some 540, 000 unemployed. Even more startling, over 350,000 young workers left the labour force entirely over that same period.

It has been estimated that between 150,000 and 300,000 young workers participate in unpaid internships each year in Canada. Furthermore, one-third of young workers are employed part-time, and many are in low wage, temporary, and otherwise insecure employment. Too many young workers are underemployed – either unable to secure enough hours of work or lost on the margins of the labour force. I calculate underemployment for young workers 15-29 to be around 23% for 2013.

Leading up to the budget, there was hope that this government would realize the depth of this crisis for young workers, and take decisive action. Unfortunately, what we have in this budget is a selection of small and largely ineffective announcements.

The paid internships announced, for example, will only reach a maximum of 2,500 individuals per year, less than 0.5% (half of one percent) of unemployed young workers, addressing a tiny fraction of the need. Funding paid internships for highly employable young workers in high demand fields, as the government promised to do, is a shocking non-solution to a very real crisis. If fields are in high demand why do we need to subsidize the hiring of young people for internships?

As has been the case in other recent federal budgets, most of what is contained in the budget is not new money, rather rehashing of previous announcements or re-allocated spending. Overall, there is only $51 million in new money for next year for education and training initiatives – that is a mere drop in the bucket.

For a comparison on the scale of the solution proposed, this government allocates $40 million over two years toward paid internships, yet has spent $473 million on Economic Action Plan ads.

General Training Initiatives

On a positive note, this budget makes modest efforts to help apprentices through several targeted programs:

Apprentices and EI:

The EI waiting period will now only apply to the first period of an apprentice’s classroom training, and be waived for subsequent training. However, EI claims for apprentices will not be pre-approved, which leads to significant delays in receiving benefits for many apprentices.

A new initiative – but not new government money – will now allow employers to top-up apprentices EI benefits (while they are in-class training) to 95% of their normal wage similar to existing maternity leave top-up.

New spending on the Employment Insurance Awareness Initiative for Apprentices that lets apprentices know that they may be eligible to receive EI while on approved training.

Canada Apprentice Loan Program: $100 million in interest free loans to first time Red Seal apprentices through the Canada Student Loans Program. Apprentices will be able to access up to $4,000 per period of technical training, and should help 26,000 apprentices per year. Only available for Red Seal trades and only for apprentices registered in their first Red Seal trade. This is a good step but it likely won’t have a big impact in terms of improving apprenticeship completion rates.

Investing in Apprenticeship Technical Training: A pilot project to examine innovative ways to deliver technical training and reduce non-financial barriers to apprenticeship completion. This includes remote learning and e-learning, as well as in-class simulators.

Youth Un(der)employment

The federal government’s Youth Employment Strategy announces several initiatives that sound great, but are unlikely to address structural issues facing young workers today and in the future.

Canada Accelerator and Incubator Program: This program adds $10 million per year for 4 years to previously announced funding, for total funding of $100 million. For-profit and non-profit organizations will bid for funding to mentor young entrepreneurs. New money won’t start to flow until 2015-16.

Internships in High Demand Fields: A promise of $30 million over two years for an Industrial Research Assistance program, which will fund science internships in small and medium sized enterprises. The Youth Employment Strategy will administer $10 million over two years. In total, this will employ 1,500 post-secondary graduates each year for two years. This is largely ineffective spending, as it is focused on high demand science and tech fields where post-graduates have been more successful finding work compared to other young workers.

Supporting paid internships: Support to small and medium sized businesses comes through reallocating existing Youth Employment Strategy funds of $15 million per year, to fund a maximum of 1,000 internships for recent post-secondary graduates.

Eliminating Vehicles from Canada Student Loan Assessment: There is currently a $5,000 exemption limit for vehicles when students list their assets on a Federal Student Loan Application. Students will no longer have to list the value of their vehicle, at an expected annual cost of $7.8 million per year. This claims to be aimed at rural students, but mostly benefits wealthier students.

A Missed Opportunity

The budget is about choices. Clearly, the choices the Conservatives made confirm that the federal government does not want to take advantage of its current fiscal position to invest in productivity, training, and helping to create good jobs while ensuring Canadian workers’ income security today and in years to come.

This budget stays the course – a course that is undeniably the wrong course for Canada. This budget mostly re-allocates spending, rather than making new investments where they are critically needed. A grab bag of boutique measures and unproductive corporate tax cuts are paid for with continued austerity. This is not a budget that will help create jobs for workers of any age in 2014 — especially not our young people.

Angella MacEwen is a senior economist at the Canadian Labour Congress and a Broadbent Fellow.